Some thoughts
posted on
May 26, 2012 03:03PM
Edit this title from the Fast Facts Section
First, this sucks. Obviously this is a major blow to the future prospects of this company. Anyone hoping to see $1+ can dream on.
Second, while the SP will probably take a beating on Monday I actually think this is good in the short term. We've just got rid of the anchor that was Lamaque. Savinko should be highly profitable in Q3 + Q4 and I think that Savinko alone justifies the current SP. In the long term is where we've taken a beating because we've lost so much future potential.
Third, any major dilution now is completely unacceptable and should not even be considered. Savinko should be able to fund itself with the help of the russian bank loan. Substantial dilution to simply speed that process up should not occur.
Fourth, it is essential that we find out how much of the shareholder debt is outstanding. Was some of it paid off when it came due in May? I doubt it, but I can hope. Any outstanding shareholder debt will be a drag on the SP. Particularly if we are forced to issue warrants to extend those loans as was planned in the proposed loan transaction.
Fifth, under what terms can we access the second tranch of financing under the russian loan? Does this default hurt our ability to access that loan?
Sixth, finding out what our working capital defficiency is in the next quarterly statements will be huge. Of the accounts payable and other current liabilities were any secured by WTG? Or did those current liabilities just drop off our balance sheet? If the later, that would be a major positive.
Seventh, the next opportunity for share price appreciation is the NI 43-101 reserve update due in Q3 for nasedkino... Wouldn't expect much until then.
As for my personal price target - IF Savinko meets the 20,000 oz target for this year and IF the Nasedkino reserve update is positive and IF we avoid substantial dilution... We could maybe see 0.20 - 0.30 by years end. 20,000 oz/year at a relatively low cash cost is nothing to scoff at. But at this point no one believes that will happen. No one believes we'll reach 50,000 oz next year and no one believes Nasedkino will ever produce anything. Until management demonstrates that they can reach the targets they set I don't even know if we'll be able to break above 0.10, let alone 0.20. That said, I'll probably be a buyer next week if the SP drops below $.06.